Wednesday, January 13, 2021

Shortage of Lumber Raising Costs Across the Board

A recent Modcoach poll shows that lumber pricing has already forced modular factories in all parts of the country to raise their costs to builders and developers since January 1st.

Many parts of the U.S. are facing lumber shortages — and experts say the problem is acute in the West after 2020’s devastating wildfires.

Industry experts say several events led to the lumber shortage: lockdown orders and closures, new safety protocols that slowed production at mills and a spike in home remodeling while Americans were quarantined followed by a massive wildfire season.

The National Association of Home Builders, or NAHB, reports that between mid-April and mid-September, lumber prices soared more than 170%, adding $16,148 to the price of a typical new single-family home. 

Prices drifted lower at the start of fall, but they’re on the rise again.

The question for modular factories and builders is how to continue quoting prices into 2021 now that the costs of lumber and many other basic commodities are showing no signs of stabilizing.

Gary Fleisher, the Modcoach, writes Modcoach News and Modular Home Coach blogs as well as the best site for off-site consultants, Modcoach Connects

Contact Gary at modcoach@gmail.com


1 comment:

Anonymous said...

Thanks for pointing this out Gary.

Unfortunately there does not appear to be an immediate end in sight for the increase in the cost of lumber, sheathing and other materials. This, coupled with the product changes and availability of other construction materials is placing pressures on the material suppliers, manufacturers, the builders of modular homes- and ultimately the retail homebuyer. Many of the changes and shortages that we are seeing are a result of regional Covid/pandemic limitations that directly affect staffing and operations of the production facilities manufacturing these items (e.g.- mills, windows, doors, cabinets, etc...). Some builders may be experiencing the loss of a sale when their customers lose financing due to price increases. Likewise modular manufacturers could be experiencing pressures from builders to honor price quotes from early or mid 2020- prices that could be as much as 10 to 15% off the current price of building materials. Many material suppliers and vendors to the manufacturers and builders are now being forced to adjust prices of materials at a greater frequency than ever before- sometimes on a weekly basis. All while the frequency of prospective new home sales for the builder -subsequently the manufacturer and material vendors- is higher than it has been in many years.

These three tiers in the construction of a new modular home- builder, manufacturer, material supplier- must all remain cognizant of the needs of the other levels- if one is forced to provide at a loss or "break even" then there is little incentive or reason for them to sell their product. Selling at a loss is always a recipe for failure. As an industry we must all work together to provide the best product and services at the best possible prices to ensure not only profitability but also longevity for all involved.

As long as the construction industry is willing to pay the increased prices of today's lumber there will be unfortunately be little incentive for the mills to increase production or to release stored sheathing and lumber, that would increase supply and affect the overall prices of these materials.